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on Accounting and Auditing |
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Issue of 2025–08–25
nine papers chosen by |
| By: | Amberger, Harald; Gallemore, John; Wilde, Jaron |
| Abstract: | Effective policymakers must balance the demands of formulating a corporate tax system that raises revenue and spurs economic activity (e.g., investment) while promoting a "level playing field" across firms. Balancing these tradeoffs has likely caused tax systems to become more complex over time, increasing firms' difficulty in understanding and complying with tax regulations. We investigate the impact of tax system complexity on the responsiveness of firm-level investment to tax policy changes. Exploiting staggered tax rate changes and variation in tax system complexity across countries, we document two key findings. First, firm-level investment is less sensitive to changes in the corporate tax rate when tax system complexity is higher, suggesting that such complexity can undermine the ability of tax policy to affect economic growth. Second, the impact of tax complexity on the sensitivity of investment to tax rate changes varies significantly across firms, with domestic-owned, smaller, and private firms being more affected. These cross-sectional disparities are consistent with tax system complexity potentially reducing tax system parity. Collectively, our findings suggest that corporate tax system complexity can negatively impact the ability of fiscal policy to affect investment and lead to heterogeneous tax policy responses across firms. |
| Keywords: | tax complexity, tax rates, investment, employment |
| JEL: | D25 F23 H23 H25 G31 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:arqudp:323939 |
| By: | Blaufus, Kay; Maiterth, Ralf; Milde, Michael; Sureth, Caren |
| Abstract: | We examine behavioral frictions in entrepreneurs' tax planning when choosing between corporate and partnership taxation under a check-the-box rule. Using German tax return data, we show that only a small fraction of entrepreneurs opt for corporate taxation, despite substantial potential tax savings. A pre-registered incentivized online experiment demonstrates that complexity aversion, status quo bias, and misperception about the corporate tax burden-arising from the interaction of corporate and deferred dividend taxation-help explain the preference for partnership taxation. We further find that these behavioral frictions heighten liquidity risk under the corporate system, particularly in the face of unexpected cash flow needs. Finally, a survey of German tax advisors indicates that tax advice only partially mitigates these frictions. Some advisors misperceive the benefits of corporate taxation, while others anticipate client biases and therefore refrain from recommending the corporate tax system. |
| Keywords: | Check-the-box, Legal Form, Tax Complexity, Tax Misperception, Behavioral Taxation, Tax Advice |
| JEL: | H25 D91 D22 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:arqudp:323941 |
| By: | Ayoub El Bahi (UIT - Université Ibn Tofaïl); Fatima Charef (UIT - Université Ibn Tofaïl); Mountacer Bourjila (UIT - Université Ibn Tofaïl) |
| Abstract: | Authors are not aware of any findings that might be perceived as affecting the objectivity of this study and they are responsible for any plagiarism in this paper. |
| Keywords: | Internal Audit, Digital Transformation, Litterature Review, Governance, Internal audit digital transformation artificial intelligence data analytics governance. Classification JEL: M42 Paper type: Theoretical Research Audit interne transformation digitale intelligence artificielle analyse de données gouvernance automatisation robotisée des processus. JEL Classification : M42 Type du papier : Recherche Théorique, Internal audit, digital transformation, artificial intelligence, data analytics, governance. Classification JEL: M42 Paper type: Theoretical Research Audit interne, transformation digitale, intelligence artificielle, analyse de données, gouvernance, automatisation robotisée des processus. JEL Classification : M42 Type du papier : Recherche Théorique |
| Date: | 2025–07–07 |
| URL: | https://d.repec.org/n?u=RePEc:hal:journl:hal-05160950 |
| By: | Lorena Rivero del Paso; Chloe Cho; Ramon Narvaez Terron |
| Abstract: | This paper examines the role of cost accounting in public financial management, focusing on budget credibility, performance-based budgeting, public procurement, and corruption detection. Despite demonstrated benefits, cost accounting remains underutilized in the public sector due to implementation constraints. The working paper proposes the adoption of automated cost accounting systems to streamline processes, reduce operational costs, and support complex data analyses. It further emphasizes the need for interoperability between government financial systems and administrative records to enhance the granularity of costing indicators. The paper also explores machine learning as a method to support budgetary decision-making with cost accounting data. |
| Keywords: | Cost accounting; Budget credibility; Performance budgeting; Procurement; Interoperability; Machine learning; Anomaly detection; Automation; Digital transformation; Digitalization; GovTech; Financial Management Information Systems |
| Date: | 2025–08–08 |
| URL: | https://d.repec.org/n?u=RePEc:imf:imfwpa:2025/159 |
| By: | Braun, Anna-Sophie; Koch, Reinald; Sureth, Caren |
| Abstract: | This study examines the effect of tax complexity on the market value of publicly traded firms. Using firm-level measures of tax complexity, we find that a one standard deviation increase in tax complexity-comparable in magnitude to the rise following the U.S. Tax Cuts and Jobs Act-is associated with a 2.6% decline in Tobin's Q. The effect is particularly pronounced for complexity arising from anti-avoidance regulations and post-filing procedures. The negative valuation effect is more substantial for firms with limited opportunities for international profit shifting, weak governance, or low internal information quality. Further analyses reveal that tax system complexity is associated with a reduced growth potential of firms and less R&D and thus negative real responses that go beyond negative investment effects. Overall, our findings provide novel evidence of the economic costs of tax complexity and contribute to the debate on the design of efficient and equitable tax systems. |
| Keywords: | tax complexity, tax avoidance, firm value, tax code complexity, tax framework complexity, cost of complexity |
| JEL: | M12 H26 H25 H32 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:arqudp:323938 |
| By: | Amberger, Harald; Stocken, Phillip C. |
| Abstract: | We examine how a CEO develops a reputation for credible financial reporting and how this reputation influences investor reactions to earnings announcements. We find that investors discount earnings news when CEOs have both strong incentives to misreport and weak reporting reputations. Further, we show that the reputation for reporting integrity is CEO-specific- a firm can restore its reputation for credible financial reporting by appointing a new CEO. Disclosures about discretionary accruals, like the allowance for doubtful accounts, play a key role in shaping these reputations. Our findings underscore the importance of ethical reporting. |
| Keywords: | Credible financial reporting, earnings manipulation, reputation |
| JEL: | G14 J63 M40 M41 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:arqudp:323940 |
| By: | Jupić, Nedžad; Gadžo, Amra |
| Abstract: | This paper examines the degree of implementation of artificial intelligence (AI) tools within accounting information systems in small and medium-sized enterprises (SMEs) in Bosnia and Herzegovina, with the objective of identifying the perceived benefits, key barriers, and their effects on business performance. The research was conducted on a sample of 99 enterprises, utilising a structured questionnaire. Findings reveal that only 21.21% of enterprises currently employ AI tools in their accounting processes, while a mere 20% of respondents make use of advanced document management systems (DMS) or cloud-based solutions—technologies that facilitate integration with AI. The research highlights a generally positive attitude among respondents regarding the impact of AI application on SME operations. The highest average rating was attributed to the statement that AI enhances the efficiency of accounting processes (4.22), followed by improved quality of financial reporting (4.02) and more effective managerial decision-making (3.93), indicating a recognised added value of AI tools in the areas of analytics and decision support. The main obstacles to AI adoption, as identified by respondents, include a lack of knowledge and expertise (3.80) and insufficient regulatory framework (3.73). In terms of financial readiness to invest in AI technologies, 44.40% of enterprises indicated willingness to invest up to approximately EUR 500 annually, 37.40% between EUR 500 and 1, 000, and only 18.20% more than EUR 1, 000. Overall, the findings suggest a significant, yet underutilised potential of AI tools in SME accounting, characterised by favourable user perceptions but constrained by educational, financial, and legislative limitations. |
| Keywords: | AI tools, accounting digitalisation, business enhancement, small and medium-sized enterprises |
| JEL: | M41 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:esconf:324135 |
| By: | Ren\'ee Men\'endez; Viktor Winschel |
| Abstract: | We present a category theoretical formulation of the Monetary Macroeconomic Accounting Theory (MoMaT) of Men\'endez and Winschel [2025]. We take macroeconomic (national) accounting systems to be composed from microeconomic double-entry systems with real and monetary units of accounts. Category theory is the compositional grammar and module system of mathematics which we use to lift micro accounting consistency to the macro level. The main function of money in MoMaT is for the repayment of loans and not for the exchange of goods, bridging the desynchronisation of input and output payments of producers. Accordingly, temporal accounting consistency is at the macroeconomic level. We show that the accounting for macroeconomies organised by a division of labor can be consistent and stable as a prerequisite for risk and GDP sharing of societies. We exemplify the theory by five sectoral agents of Labor and Resource owners, a Company as the productive sector, a Capitalist for profits, and a Bank as the financial sector providing loans to synchronise the micro and the macro levels of an economy. The dynamics is described by eight sectoral macroeconomic bookings in each period demonstrating stable convergence of the MoMaT in numerical simulations. The categorical program implements a consistent evolution of hierarchical loan repayment contracts by an endofunctor. The universal constructions of a limit verify all constraints as the sectoral investment and learning function at the macroeconomic level. The dual colimit computes the aggregated informations at the macro level as usual in the mathematics of transitions from local to global structures. We use visual diagrams to make complex economic relationships intuitive. This paper is meant to map economic to categorical concepts to enable interdisciplinary collaboration for digital twins of monetary accounting systems. |
| Date: | 2025–08 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2508.14132 |
| By: | Rossen Rozenov; Mr. Waikei Raphael Lam; Yang Yang; Yinjie Yu |
| Abstract: | Ireland’s reliance on corporate income tax (CIT) receipts from multinational enterprises, concentrated in a small number of companies, presents significant risks to the budget. The uncertain nature of this revenue calls for a robust fiscal framework to safeguard public finances. This paper proposes strengthening the national fiscal framework by establishing a prudent medium-term debt anchor and an expenditure rule to guide the annual budget process. We first establish a prudent debt anchor for Ireland by calibrating CIT shocks and simulating possible debt trajectories. Second, we propose an operational rule based on multi-year expenditure ceilings. The ceilings are calibrated such as to stabilize debt at the anchor level while accounting for the economy’s cyclical position. Although tailored to Ireland, the methodology employed has broader applicability for designing effective fiscal rules. |
| Keywords: | Fiscal Framework; Debt Anchor; Expenditure Ceilings; Fiscal Reaction Function; debt trajectory; debt fan; expenditure rule; FDI risk; Corporate income tax; Fiscal governance; Fiscal rules; Fiscal stance; Global |
| Date: | 2025–07–25 |
| URL: | https://d.repec.org/n?u=RePEc:imf:imfwpa:2025/149 |